CNBC, Squawk Box

KAREN TSO: Joining us now around the studio set is Steven Ciobo, who is Australia's Minister for Trade, Tourism and Investment. Minister, great to see you around the studio this morning.

STEVEN CIOBO: Good to be with you.

KAREN TSO: Let me ask you about relations at this point between Westminster and Canberra. Is there any inkling that there could be some form of a trade deal that comes quickly in the system once Article 50 is triggered?

STEVEN CIOBO: Well it's more than an inkling. We've announced a Joint Working Group to do exactly that. The Joint Working Group's focus is to scope out what we might be trying to achieve under an FTA. We've had some very constructive and warm and cordial preliminary discussions about an FTA once the UK’s formally out of the EU.

KAREN TSO: There is a level of comfort between the two trading partners, but what is the benefit of an FTA, what does Australia gain, what does the UK gain?

STEVEN CIOBO: I think there's big benefit. The fact is that both Australia and the UK have very mature, highly diversified economies. In a range of areas we're already quite competitive and by that I mean that we have high levels of integration, high levels of sophistication, especially in relation to services but also big, important source and destination countries for investment. Australian investment into the UK, and UK investment into Australia are both really strong flows. There is a lot of potential there and I'm very confident that together with Liam Fox, that we'll continue to have some very constructive discussions and ultimately the fewer barriers that we have to trade and investment, the better that both countries do.

GEOFF CUTMORE: Do you recognise the barrier of the Clause 50 triggering to negotiating a prompt agreement with the UK? I mean this process will ultimately take two years. We suspect it could be even longer, you know how negotiations with the EU go. Does that mean Australia really can't do any trade deal with the UK on a bilateral basis until that process is finished?

STEVEN CIOBO: Look, and that's the advice that I've received from the UK. They've made it clear that it would have to be once the UK has formally exited the European Union. We understand that, I mean, there's a process to be worked through and understandably the bulk of the UK's focus will be on its actual exit negotiations with the EU. I mean, that makes perfect sense, it's logical. So we are engaging now. As I said, preliminary discussions, some scoping out of our level of ambition, but once that process has been finalised, that's when we'll engage in earnest in negotiations.

GEOFF CUTMORE: If you were a gambling man, would you put money on a deal with the UK before you actually get a deal with the EU, given it took Canada seven years?

STEVEN CIOBO: I'm not a gambling man. Look, these two things run in parallel. Our discussions with the EU are more advanced than they are with the UK at this point in time because with the EU, we're reaching the final stages of a scoping study, which will really map out the pathway ahead. With the UK we're in preliminary discussions, so it’s a slightly different process, but we can walk and chew gum at the same time, so it's fine.

GEOFF CUTMORE: As I understand it, you upset the Italian farmers by putting tariffs on tinned Italian tomatoes coming into Australia. Given it took just a small group of farmers in Wallonia to scupper almost the Canadian deal that had been negotiated for seven years, you're not making friends in Europe and do you think that that might hold up the potential for any new deal?

STEVEN CIOBO: No, look, I mean there's a lot of merit and a lot of strong argument about why the EU and Australia should be able to do a deal. The fact is that in terms of Italian canned tomatoes, our independent anti-dumping commission looked at it, they made some decisions, it was subject to review. We obtained some additional information and they reached a different conclusion and the Italians are happy with the situation that we've arrived at now, because it has, and it gets overly technical, but it has to do with Europe's green box subsidy programme and so now we've found a pathway, having reviewed the information that they're happy with. But look, ultimately free and liberalised trade is good for both countries and especially for Europe because Australia sits in the fastest growing region of the world. Europe has a lot of growth challenges ahead of it and so doing this deal is a good outcome for both.

KAREN TSO: What do you talk about, this whole push towards globalisation is not where economies have been going, I mean, Donald Trump swept to power on this whole protectionist message, do you have concerns that the tide is changing and that FTAs are really a story of the past, not the future?

STEVEN CIOBO: Look, I'm concerned that there are some people that put forward that point of view but that's not a point of view that Australia agrees with. We are unapologetically pro-free and liberalised trade.

KAREN TSO: Because the country needs trade but other countries don't necessarily need as much trade as what Australia does -

STEVEN CIOBO: Well I'd argue that every country, I'd argue every country needs trade. I mean, the fact is that if you limit yourself in terms of your trade and investment options, all you're doing is limiting the growth of your economy and all you're doing is limiting job opportunities for your economy as well. Australia is very engaged in trade and investment. We see big opportunities, we've locked in place three big free trade agreements with China, with Korea and with Japan and we'll continue.

KAREN TSO: What can you say to the Brits who might be watching this interview and saying, well what are the ramifications for negotiating with Europe once there is an exit, and Canada was closely watched, Australia's been closely watched for negotiations with the Europeans, but it's a different system here, where you've almost had a country operating under the umbrella of Brussels and their different standards are quite similar to Europe verses what Canada and Australia have. Are there any crossovers you think between negotiations you've been having with Europe and what lies ahead for Britain down the track?

STEVEN CIOBO: Look, that's a great question. I mean, it's difficult, it is difficult to say that from Australia's perspective, because we are some distance away, but we find the Europeans very good bona fide interlockers, we find them very good to deal with. They have strong interests that they stand to defend in terms of their defensive interests. We've got strong interests that we want to capture. I mean, we’ve made it very clear that we expect to increase our agricultural exports into Europe. Perversely as we sit today, Australia actually imports more agricultural products from Europe with our population of 23, 24 million than Europe does with its massive population from a country like Australia. I mean, people can instinctively understand that that doesn't make sense. There are gains being made and likewise, Europe will have opportunities in Australia too, particularly and it goes to my earlier point, particularly to use Australia as a landing point for an Asian growth structure.

GEOFF CUTMORE: Just to wrap up with you, obviously the elephant in the room really is Donald Trump and trade and what happens next. After the shirt fronting that I think Mr Turnbull gave him, what [are the] prospects do you think for positive relations between Australia and America on the trade front going forward?

STEVEN CIOBO: Very high. I mean, Australia and the US of course have been allies, good friends, for decades and decades. It's arguably our strongest and most important relationship and I'm sure that will continue irrespective of which government's in power in Australia and which administration is in power in the United States. We want to engage constructively with them. We'll wait to see who the US Trade Representative is, that confirmation process has to happen for Lighthizer, so we're watching that to see ultimately how their trade policy will be crafted. But I'm very confident that Australia and the US will continue to have very good trade and investment relationships.

GEOFF CUTMORE: Yeah, I guess friends can speak to each other with cross words, can't they?

STEVEN CIOBO: Well no cross words, but robustly and maturely.

GEOFF CUTMORE: Nice to have you in Steven, thanks very much for joining us.